Sabadell shareholders voted heavily against Banco Bilbao Vizcaya Argentaria’s (BBVA) takeover bid, revealing another level of uncertainty over one of Spain’s highly publicised banking operations.
More than 97% of the bank’s client shareholders rejected the offer from BBVA, according to figures published Tuesday by the Catalan bank.
Sabadell stated in a filing with the Comisión Nacional del Mercado de Valores (CNMV) that those who accepted the deal accounted for just 1.1% of the bank’s total capital.
Sabadell said the other 30.8% are capital owned by non-controlling shareholders that are clients of the bank.
Under the pitch from BBVA, one new BBVA share would be exchanged for every 4.8376 Sabadell shares, a ratio that was unattractive to almost all investors.
The findings, first reported by EFE, highlight Sabadell’s limited support for the all-share acquisition, which BBVA had described as a “strategic merger” aimed at integrating Spain’s fragmented banking sector.
Weak participation fuels speculation over a second bid
The mild reception from small investors has revived uncertainty about whether the takeover will succeed, while all eyes now turn to the CNMV, which on Friday will reveal the percentage of other shareholders who have accepted the offer.
BBVA had made its bid conditional on obtaining at least 50% of Sabadell’s shares.
However, the bank said there could still be a second offer in the future if it can win the backing of above 30% of shareholders.
Regulatory rules maintain that in that situation, a new offer would have to be offered entirely in cash.
EFE quoted a statement from BBVA, which said that its board of directors would decide whether or not to move ahead with any second offer.
CNMV to define “fair price” for any new cash offer
Regulatory approval will be needed to convert the original all-share offer into a cash equivalent.
For any possible future cash offer, the CNMV must act as a regulator of that “fair price”, which cannot be lower than what was initially offered.
The CNMV last week called speculation concerning the price of a possible new bid “purely conjecture.”
The regulator stressed that it will establish the parameters to establish a fair valuation, to avoid BBVA offering less than what the first bid represented in market terms.
Both investors and analysts will pay close attention to the agency’s stance, as many see the impasse between Sabadell and BBVA as a barometer for Spain’s hostile takeover rules.
Divergent views between the two banks
The two banks are still in disagreement over how any new offer should be appraised.
BBVA contends that the price must stay the same as the initial all-share bid, whilst Sabadell claims that any second offer must be greater to meet the fairness criteria.
This value dispute complicates the possibility of the takeover proceeding further.
For the time being, Sabadell’s unequivocal rejection by its own clientele represents a substantial impediment to BBVA’s intentions to expand its reach through the acquisition.
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